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Cleansweep

Side-by-Side Chart on Major Medicare Prescription Drug Proposals

MAJOR MEDICARE PRESCRIPTION DRUG PROPOSALS - JUNE 2000

Thomas

Clinton

Senate Democrats (S. 2541)

Eshoo (H.R. 4607)

General approach

Establishes a new, Part D Medicare drug benefit program that provides a universal entitlement to subsidized drug coverage provided through Medicare+Choice (M+C) or new private prescription drug (PDP) plans. Beneficiaries enrolled in Part D would be able to select from at least 2 qualified plans offering a variety of benefit packages providing at least the minimum required benefit value. In general, coverage would be subsidized through the provision of government reinsurance to plan sponsors. Low-income beneficiaries would receive additional subsidies for premiums and/or cost-sharing. A new Medicare Benefits Administration (MBA) within HHS would be established to administer the M+C and Part D programs. The drug coverage would be effective January 1, 2003.

Establishes a new, Part D Medicare drug benefit program that provides a universal entitlement to a specified drug benefit package. The benefit package does not include stop-loss coverage (although the Administration has reserved $35 billion in its budget that may be used for a catastrophic benefit). Drug benefits would be provided in each geographic service area by one benefit manager under contract with the Health Care Financing Administration (HCFA). All Medicare beneficiaries would pay a uniform monthly Part D premium and low-income beneficiaries would receive enhanced subsidies through Medicaid for premiums and/or cost-sharing. The drug program coverage would be effective January 1, 2003.

Establishes a new, Part D Medicare drug benefit program that provides a universal entitlement to a specified drug benefit package. The bill does not specify a stop-loss benefit but authorizes the Secretary of HHS to implement a stop-loss benefit, costing up to $50 billion for 2003-2010, by January 1, 2003 if Congress does not act to provide such benefit by June 1, 2002. Drug benefits would be provided in each geographic service area by one private benefit manager under contract with the Health Care Financing Administration (HCFA). All Medicare beneficiaries would pay a uniform monthly Part D premium and low-income beneficiaries would receive enhanced subsidies for premiums and/or cost-sharing. The drug program coverage would be effective January 1, 2002.

Establishes a new, Part D Medicare drug benefit program that provides a universal entitlement to a specified drug benefit package, which includes stop-loss coverage. Beneficiaries enrolled in Part D would select their benefit manager from among the benefit managers under contract with the Office of Personnel Management (OPM) to provide drug benefit services in their area. All Medicare beneficiaries would pay a uniform monthly Part D premium and low-income beneficiaries would receive enhanced subsidies for premiums and/or cost-sharing. The drug program coverage would be effective January 1, 2002.

PARTICIPATION

Eligibility for coverage

All Medicare beneficiaries enrolled in Part B would be eligible to obtain qualified prescription drug coverage through enrollment in a M+C or PDP under Part D. There would be a one-time Part D enrollment opportunity for those with Part A only.

All aged, disabled and ESRD beneficiaries would be eligible to enroll in the government subsidized prescription drug plan under Part D of the Medicare program during an open enrollment period.

All aged, disabled and ESRD beneficiaries would be eligible to enroll in the government subsidized prescription drug plan under Part D of the Medicare program during an open enrollment period.

All aged, disabled and ESRD beneficiaries would be eligible to enroll in the government subsidized prescription drug plan under Part D of the Medicare program during an open enrollment period.

Entitlement

All eligible Medicare beneficiaries would be entitled to subsidized drug coverage through enrollment in a qualified drug plan.

All Medicare beneficiaries opting to enroll in Part D would be entitled to the defined package of drug benefits.

All Medicare beneficiaries opting to enroll in Part D would be entitled to the defined package of drug benefits.

All Medicare beneficiaries opting to enroll in Part D would be entitled to the defined package of drug benefits.

Mandatory or voluntary participation

Voluntary. Beneficiaries would have a choice of at least two plans, one of which would be a PDP.

Voluntary, in that beneficiaries would elect to enroll in Part D (the drug coverage) in the same way and at the same time as for Part B, with special rules for first year of the program. No provision for late enrollment except for those with employer coverage or low-income.

Voluntary, in that beneficiaries would elect to enroll in Part D (the drug coverage) in the same way and at the same time as for Part B, with special rules for first year of the program. No provision for late enrollment except for those with employer coverage or low-income.

Voluntary, in that beneficiaries would elect to enroll in Part D (the drug coverage) in the same way and at the same time as for Part B, with special rules for first year of the program. No provision for late enrollment except for those with employer coverage or low-income.

Enrollment process

Beneficiaries must enroll in a qualified plan during specified open election periods in order to avoid penalties or restrictions. Elections would be coordinated with M+C enrollment. There would be an initial election period beginning November 1, 2002. Special election periods would be established for circumstances such as involuntarily losing drug coverage. Beneficiaries could change plans annually, so long as they maintain continuous drug coverage. Plans may not refuse enrollment to any beneficiary except for capacity limitations. Beneficiaries enrolling in a plan other than during open election periods, or those who have not maintained continuous coverage, may be subject to increased premiums or pre-existing condition exclusions to the extent of the additional risk involved as established through an appropriate actuarial opinion.

Generally, beneficiaries would have a one-time opportunity to enroll in Part D. For 2003, beneficiaries may enroll, and disenroll and reenroll at any time prior to December 31, 2003. After 2003, the option to enroll coincides with enrollment in Part B upon Medicare eligibility. Special provisions apply for active workers or retirees losing retiree coverage who may enroll after their initial enrollment period, as well as for low-income persons qualifying for subsidized premiums. Otherwise, individuals are not entitled to enroll after the initial enrollment period.

Generally, beneficiaries would have a one-time opportunity to enroll in Part D. For 2002, beneficiaries may enroll, and disenroll and reenroll at any time prior to December 31, 2002. After 2002, the option to enroll coincides with enrollment in Part B upon Medicare eligibility. Special provisions apply for active workers or retirees losing retiree coverage who may enroll after their initial enrollment period, as well as for low-income qualifying for subsidized premiums. Otherwise, individuals are not entitled to enroll after the initial enrollment period.

Generally, beneficiaries would have a one-time opportunity to enroll in Part D. For 2002, beneficiaries may enroll, and disenroll and reenroll at any time prior to December 31, 2002. After 2002, the option to enroll coincides with enrollment in Part B upon Medicare eligibility. Special provisions apply for active workers or retirees losing retiree coverage, as well as for low-income persons qualifying for subsidized premiums. Otherwise, individuals are not entitled to enroll after the initial enrollment period. The OPM Director is responsible for establishing a process (based on M+C) for beneficiaries to select a benefit manager. Beneficiaries may change benefit managers at least annually and at other times specified by the OPM Director, based on circumstances for which a change would be permitted under M+C. Benefit managers must accept all enrollees up to their capacity.

Information

The Office of Beneficiary Assistance within the MBA would be responsible to coordinate and disseminate all information on the entire Medicare program. Sponsors of M+C drug coverage or PDPs must disclose information on pharmacy access, formularies, cost-sharing requirements and grievance and appeals procedures. Upon request, they must disclose the same information as required under M+C rules. They must have mechanisms to respond to enrollee requests and must make available through the Internet and in writing any changes to their formularies. Plans must provide an explanation of benefits and notice of benefits in relation to the initial coverage limit and annual out-of-pocket limit for the current year whenever benefits are provided (but not more often than monthly).

Benefit managers are required to disseminate informational materials designed to encourage effective and cost-effective use of drugs and to ensure beneficiaries understand their rights and obligations. Benefit managers must furnish enrollees an explanation of benefits and a notice of the balance of benefits remaining for the year whenever drugs are provided.

Private entities under contract to administer the benefit are required to disseminate informational materials designed to encourage effective and cost-effective use of drugs and to ensure beneficiaries understand their rights and obligations. Benefit managers must furnish enrollees an explanation of benefits and a notice of the balance of benefits remaining for the year whenever drugs are provided.

The Director of OPM is to provide for the dissemination of information that will enable individuals to make informed decisions about the election of a benefit manager.

Benefit managers are required to disseminate informational materials designed to encourage effective and cost-effective use of drugs and to ensure beneficiaries understand their rights and obligations. Benefit managers must furnish enrollees an explanation of benefits and a notice of the balance of benefits remaining for the year whenever drugs are provided.

PREMIUMS AND SUBSIDIES

Beneficiary premiums

In general, beneficiaries would pay the premium associated with their choice of prescription drug coverage. Plans are required to charge uniform, community-rated premiums to all who have enrolled during open election periods and have maintained continuous drug coverage.

Generally, beneficiaries would pay monthly premiums in an amount calculated to cover 50% of the aggregate benefit costs of the Medicare Part D drug program. The beneficiary premium is estimated by CBO to be $24.10 per month in 2003, rising to $50.90 per month in 2010, not including any costs for the potential catastrophic benefit.

Generally, beneficiaries would pay monthly premiums in an amount calculated to cover 50% of the aggregate benefit costs of the Medicare Part D program.

Generally, beneficiaries, regardless of their choice of benefit manager, would pay monthly premiums calculated to cover 50% of the aggregate cost of Medicare Part D drug program benefits.

Government subsidies-

Medicare population in general

The government would subsidize qualified drug plans by providing reinsurance to plan sponsors for higher cost enrollees (thus reducing the premiums charged to beneficiaries). Government reinsurance payments to the plans would cover a proportion of the benefits paid by the plan beginning at $1250 in drug expenditures for an individual (amount indexed annually). The proportion of the benefits paid by the government would gradually increase from 30% to 90% as an individualís expenditures rose. According to sponsors of the proposal, the government reinsurance amounts to a 35% subsidy for all participating Medicare beneficiaries.

For the Medicare population in general, the government would subsidize 50% of the annual costs of the Medicare Part D drug benefit. (Unclear if this would also apply to the potential catastrophic drug coverage.)

For the Medicare population in general, the government would subsidize 50% of the annual costs of the outpatient drug benefit. (Unclear if this would also apply to the potential catastrophic drug coverage.)

For the Medicare population in general, the government would subsidize 50% of the annual costs of the Medicare Part D drug program.

Government subsidies --

Premium assistance for low-income population

Beneficiaries with incomes that do not exceed 135% of poverty would receive a full subsidy for the premium cost of a plan with standard coverage (either the standard benefit or a benefit actuarially equivalent to the standard benefit) available to them. If only plans offering greater than standard value coverage are available in their area, those plans must accept as payment in full an amount that is equal to the planís premium multiplied by the ratio of the value of standard benefits to the value of the benefits offered by the plan. Beneficiaries with incomes between 135% and 150% of poverty would receive premium subsidies based on a linear sliding scale of between 0% and 100% of the premium.

Medicaid would pay Medicare Part D drug premiums for those with annual incomes to 135% of poverty. Medicaid would provide a partial drug premium subsidy for those with incomes between 135% and 150% of poverty. The Medicaid match rate for costs of those above 100% of poverty would be 100% federal. Existing match rates would apply for those with incomes below 100% of poverty.

Medicaid would pay Medicare Part D drug premiums for those with annual incomes to 135% of poverty. Medicaid would provide a partial drug premium subsidy for those with incomes between 135% and 150% of poverty. The Medicaid match rate for costs of those above 100% of poverty would be 100% federal. Existing match rates would apply for those with incomes below 100% of poverty.

Medicaid would pay Medicare Part D drug premiums for those with annual incomes to 135% of poverty. Medicaid would provide a partial drug premium subsidy for those with incomes between 135% and 150% of poverty. The Medicaid match rate for costs of those above 100% of poverty would be 100% federal. Existing match rates would apply for those with incomes below 100% of poverty.

Government subsidies --

Cost sharing assistance for low-income population

Beneficiaries with incomes that do not exceed 135% of poverty would have to pay nominal copayments and would receive subsidies for up to 95% of cost-sharing amounts. Plans would receive reimbursements for cost-sharing amounts or may elect to receive capitated payments based on the actuarial value of the cost sharing subsidies, adjusted for differences in risk.

Medicaid would pay drug cost-sharing for those with annual incomes to 135% of poverty. The Medicaid match rate for costs of those above 100% of poverty would be 100% federal. Existing match rates would apply below 100% of poverty.

Medicaid would pay drug cost-sharing for those with annual incomes to 135% of poverty. The Medicaid match rate for costs of those above 100% of poverty would be 100% federal. Existing match rates would apply below 100% of poverty.

Medicaid would pay drug cost-sharing for those with annual incomes to 135% of poverty. The Medicaid match rate for costs of those above 100% of poverty would be 100% federal. Existing match rates would apply below 100% of poverty.

Collection of premiums and distribution of subsidies

The MBA would be responsible for administering the program, including the low-income subsidy program. Premiums would be collected by the plans. The Administrator would notify plans of the individuals eligible for low-income subsidies. Plans would reduce premiums and cost-sharing for these individuals and be reimbursed the subsidy amounts by the Administrator.

Beneficiary premiums would be deducted from Social Security checks the same as they are for Part B premiums. Medicaid subsidies would likely work similarly to current QMB/SLMB program. Retiree plan subsidies would be paid to the sponsor or to the drug benefit manager for the retiree plan.

Beneficiary premiums would be deducted from Social Security checks the same as they are for Part B premiums. Medicaid subsidies would likely work similarly to current QMB/SLMB program. Retiree plan subsidies would be paid to the sponsor or to the drug benefit manager for the retiree plan.

Beneficiary premiums would be deducted from Social Security checks the same as they are for Part B premiums. Medicaid subsidies would likely work similarly to current QMB/SLMB program. Retiree plan subsidies would be paid to the sponsor or to the drug benefit manager for the retiree plan.

DRUG BENEFITS

Standard or variable benefit package

A standard benefit package would be defined in statute. Plan sponsors could offer the standard package or an actuarially equivalent or richer package, with the same out-of- pocket limit and the same actuarial benefit up to the initial annual coverage limit. Plans may offer more generous coverage for covered drugs only. Actuarial values and methods as well as the annual indexing values would be determined by the Administrator. Plan sponsors could use opinions certified by independent qualified actuaries.

Standard benefit package for FFS Medicare. M+C or retiree plans must at least provide the value of the standard benefit as a minimum. Some variation in coinsurance payments would be allowed, but no deductible or coinsurance in excess of 50% could be imposed. (See below.)

Standard benefit package for FFS Medicare. M+C or retiree plans must at least provide the value of the standard benefit as a minimum. Some variation in coinsurance payments would be allowed, but no deductible or coinsurance in excess of 50% could be imposed. (See below.)

Standard benefit package for FFS Medicare. M+C or retiree plans must at least provide the value of the standard benefit as a minimum. Some variation in coinsurance payments would be allowed, but no deductible or coinsurance in excess of 50% could be imposed.

Annual drug deductible

The standard package would have an annual deductible of $250 in 2003. For subsequent years the deductible amount would be indexed to the annual percentage increase in the average per capita aggregate expenditures for covered outpatient drugs for Medicare beneficiaries. Plans providing other than the standard benefit could require different deductible amounts within the overall actuarial equivalence requirements.

No annual drug deductible.

No annual drug deductible.

No annual drug deductible.

Beneficiary coinsurance/

copayment

The standard package would have beneficiary coinsurance of 50%. Plans providing other than the standard benefit could require different coinsurance or copayments within the overall actuarial equivalence requirements.

50% coinsurance.

Benefit managers could propose greater government cost-sharing for generic drugs, drugs on formulary, or drugs obtained through mail order if evidence shows it would not result in higher government costs in the aggregate.

50% coinsurance.

Contracting entities could propose greater government cost-sharing for generic drugs, drugs on formulary, or drugs obtained through mail order if evidence shows it would not result in higher government costs in the aggregate.

50% coinsurance.

Benefit managers could propose greater government cost-sharing for generic drugs, drugs on formulary, or drugs obtained through mail order if evidence shows it would not result in higher government costs in the aggregate.

Annual benefit limits or cap

The standard package would have an initial coverage limit in 2003 of $2100 (plan pays 50%) above the deductible. For subsequent years the initial coverage limit would be indexed in the same manner as the deductible (see above). Plans providing other than the standard benefit must provide the same actuarial benefit amount.

Drug costs (including beneficiary coinsurance):

2003, 2004--$2,000

2005, 2006-- $3,000

2007, 2008-- $4,000

2009 -- $5,000

2010 on --$5,000+CPI

Drug costs (including beneficiary coinsurance):

2002, 2003, 2004--$2,000

2005, 2006-- $3,000

2007, 2008-- $4,000

2009 -- $5,000

2010 on --$5,000+CPI

Drug costs (including beneficiary coinsurance):

2002, 2003--$2,000

2004, 2005-- $3,000

2006, 2007-- $4,000

2008 -- $5,000

2009 on --$5,000+CPI

Stop-loss (coverage of drug expenditures over a specified annual threshold)

The standard package would have an annual out-of-pocket stop-loss threshold of $6,000 in 2003. For subsequent years the stop-loss threshold would be indexed in the same manner as the deductible (see above). Plans providing other than the standard benefit must provide the same stop-loss threshold as in the standard package.

No annual stop loss.

However, in his FY2001 budget, the President has reserved $35 billion over the years 2006-2010 to add protections for catastrophic drug costs. Details are to be negotiated with Congress.

Directs the Secretary of HHS to recommend to Congress a catastrophic benefit to take effect by January 1,2003. Costs of the benefit are not to exceed $50 billion between 2003-2010; a reserve fund of $50 billion is established. If Congress fails to enact a catastrophic benefit by June 1, 2001, then the Secretary is to promulgate regulations by January 1, 2002.

Annual stop-loss of:

2002 -- $5,000

2003 on -- $5,000 + CPI (rounded to the nearest multiple of 25)

ACCESS TO DRUGS

Covered drugs

All therapeutic classes of drugs and biologicals that are available only by prescription, and insulin and insulin supplies. Excluded would be drugs covered under Medicare Parts A or B, and those in categories that may be excluded under Medicaid such as weight loss or gain, fertility, cosmetic or hair growth, cough or cold relief, vitamins and minerals, non-prescription drugs, barbituates, and benzodiazapenes. Smoking cessation agents would be covered. Non-formulary drugs would also excluded if the formulary is developed consistent with requirements (developed by a committee, includes at least one drug in every therapeutic category and class, and has a process for appeals).

All therapeutic classes of drugs and biologicals that are available only by prescription, and insulin and insulin supplies. Exclusions from coverage are similar to Medicaid, such as drugs for weight loss or gain, fertility, cosmetic or hair growth, cough or cold relief, vitamins and minerals and non-prescription drugs, unless specifically provided otherwise by the Secretary of HHS. However, smoking cessation agents would be covered.

All therapeutic classes of drugs and biologicals that are available only by prescription, and insulin and insulin supplies. Exclusions from coverage are similar to Medicaid, such as drugs for weight loss or gain, fertility, cosmetic or hair growth, cough or cold relief, vitamins and minerals and non-prescription drugs, unless specifically provided otherwise by the Secretary of HHS or certified to be medically necessary by a health care professional. However, smoking cessation agents would be covered.

All therapeutic classes of drugs and biologicals that are available only by prescription, and insulin and insulin supplies. Exclusions from coverage are similar to Medicaid, such as drugs for weight loss or gain, fertility, cosmetic or hair growth, cough or cold relief, vitamins and minerals and non-prescription drugs, unless specifically provided otherwise by the Secretary of HHS. However, smoking cessation agents would be covered.

Formulary rules

Plans may have formularies so long as the formulary is developed by a committee that includes at least one physician and one pharmacist; the formulary includes at least one drug in every therapeutic category and class; and the plan sponsor has a process for appeals of denials for coverage based on application of the formulary.

Secretary of HHS may not authorize a particular formulary. Benefit managers could use formularies so long as any specifically named drug prescribed for a beneficiary would be covered, up to the benefit limits, if certified as medically necessary by the prescribing health care professional.

Secretary of HHS may not require a particular formulary. Contracting private entities could use formularies so long as any specifically named drug prescribed for a beneficiary would be covered, up to the benefit limits, if certified as medically necessary by the prescribing health care professional.

The Director or Secretary of HHS may not authorize a particular formulary. Benefit managers could use formularies so long as any specifically named drug prescribed for a beneficiary would be covered, up to the benefit limits, if certified as medically necessary by the prescribing health care professional.

Access to drugs not on formulary

Beneficiaries could appeal for coverage of medically necessary non-formulary drugs if the prescribing physician determines that the formulary drug is not effective for the patient or has significant adverse effects for the patient.

Any specifically named drug prescribed for a beneficiary would be covered, up to the benefit limits, if certified as medically necessary by the prescribing health care professional.

Any specifically named drug prescribed for a beneficiary would be covered, up to the benefit limits, if certified as medically necessary by the prescribing health care professional.

Any specifically named drug prescribed for a beneficiary would be covered, up to the benefit limits, if certified as medically necessary by the prescribing health care professional.

Cost containment strategies

Plans could use formularies and other cost containment strategies. Plan sponsors must have in place an effective cost and drug utilization management program, including appropriate incentives to use generic drugs, when appropriate.

Benefits managers must specify proposed cost and utilization management strategies in their contract proposals. One criteria for selection of benefit managers would be their effectiveness in containing costs through pricing incentives and utilization management.

Contracting entities must have in place effective cost and utilization management systems.

Benefit managers, subject to provisions of their contract with OPM, may use such cost containment strategies as necessary, including generic substitution, formulary limits, differential copays, and mail order services. They may also offer multiple products with different formulary and copayment structures.

Appeals process

Plans must have meaningful grievance procedures and appeals processes that conform to M+C requirements and allow individuals to appeal to obtain coverage for drugs not on the planís formulary.

Benefit managers must have in place grievance and appeal procedures which are equivalent, to the extent found necessary by the Secretary, to those for Medicare+Choice plans.

Private contracting entities must have in place grievance and appeal procedures which are equivalent, to the extent found necessary by the Secretary, to those for Medicare+Choice plans.

Benefit managers must have in place grievance and appeal procedures which are equivalent, to the extent found necessary by the Secretary, to those for Medicare+Choice plans.

Treatment of outpatient drugs already covered by Medicare

Outpatient drugs already covered by Medicare Parts A or B would be excluded from Part D coverage, unless Part A or B benefits have been exhausted.

Drugs already covered under Parts A or B would be excluded from coverage under Part D, until Part A or Part B benefits are exhausted.

Drugs already covered under Parts A or B would be excluded from coverage under Part D, until Part A or Part B benefits are exhausted. This includes all injectables for which payment was made, or should have been made, under section 1862(s)(2)(A) or (B)as of the date of enactment.

Drugs already covered under Parts A or B would be excluded from coverage under Part D, until Part A or Part B benefits are exhausted.

DRUG PRICING

Drug pricing

Plans would establish their own prices.

Drug prices would be negotiated between benefit managers and drug manufacturers, wholesalers, and pharmacies. Negotiated prices would not be subject to administrative or judicial review. Benefit managersí contract proposals must specify prices and annual increases in such prices.

Drug prices would be negotiated between private contracting entities and drug manufacturers, wholesalers, and pharmacies. Private entitiesí contract proposals must include a detailed description of the schedule of negotiated prices.

Benefit managers would establish a schedule of prices for covered drugs. Such prices would not be subject to administrative or judicial review. Benefit managersí contract proposals must specify prices and annual increases in such prices.

Access to price discounts once limit is reached

Plan sponsors must issue cards to enrollees to ensure access to negotiated prices regardless of whether benefits are payable because of the application of the deductible or the annual initial benefit limit.

Pharmacies may not charge beneficiaries more than the negotiated price, regardless of whether the benefit limit has been reached.

Pharmacies may not charge beneficiaries more than the negotiated price, regardless of whether the benefit limit has been reached.

Pharmacies may not charge beneficiaries more than the negotiated price, regardless of whether the benefit limit has been reached.

PARTICIPATING ENTITIES

Eligible entities

Plan sponsors must be licensed as risk bearing entities in each state in which they would offer coverage. Entities not so licensed could receive a waiver from the Administrator on grounds and under procedures similar to those for provider sponsored organizations under M+C. The Administrator would establish solvency and capital adequacy standards.

Any entity that the Secretary determines is capable of administering the drug benefit program. Entities must have sufficient personnel and resources and a satisfactory record of professional competence and financial integrity.

Private entities capable of administering the drug benefit program, such as a prescription drug vendor, wholesale or retail pharmacist delivery system, health care provider or insurer, any other type of entity specified by the Secretary, or a consortium of such entities. Entities must have sufficient personnel and resources and a satisfactory record of professional competence and financial integrity.

Any entity that the OPM Director determines is capable of administering the drug benefit program. Entities must have sufficient personnel and resources and a satisfactory record of professional competence and financial integrity. The entity must have in place systems of beneficiary protections including: confidentiality, grievance and appeals, clinical quality, and nondiscrimination in enrollment.

Contracts with private entities

The Administrator would contract with plan sponsors for 1 year terms. A contract could cover more than one plan. Sponsors would have to submit information on the coverage to be provided; actuarial value of the coverage; and the monthly premium including actuarial certification of the actuarial basis for the premium, the portion of the premium attributable to benefits above the standard benefit, and the reduction in premium resulting from the reinsurance subsidy. The Administrator would have the same authority to negotiate premiums and other contract terms as the Office of Personnel Management does with respect to FEHBP plans. The same protections against fraud as apply to M+C plans would apply (e.g., audits, etc.). PDP plan sponsors would have to pay a fee to help support beneficiary information activities; such fee could not exceed 20% of the maximum allowed for M+C plans. Intermediate sanctions as apply for M+C would apply.

The Secretary would designate at least 15 geographic service areas; they would not be subject to administrative or judicial review. Areas would be designated to ensure a meaningful level of competition and to secure sufficient contracts for the maximum feasible number of areas. Contracts would be competitively awarded for 3 to 5 years. The second and succeeding contracts could be extended noncompetitively for up to 5 years. Selection criteria include: estimated total cost of the contract; prior experience in administering drug benefit programs; effectiveness in containing costs through pricing incentives and utilization management; quality and efficiency of services; and other factors. The Secretary may waive conflict of interest rules applicable to federal acquisitions. In awarding contracts, the Secretary shall consider the need to maintain sufficient number of eligible entities to ensure vigorous competition.

The Secretary would designate at least 15 geographic service areas. Areas would be designated so as to ensure a meaningful level of competition among eligible entities; secure sufficient contracts for the maximum feasible number of areas; and foster the existence of a sufficient number of entities that are eligible and willing to administer Part D benefits. Contracts would be awarded competitively for 2 to 5 years. Contracts would be subject to an evaluation after 2 years. The Secretary may waive conflict of interest rules applicable to federal acquisitions. In awarding contracts, the Secretary shall consider the need to maintain sufficient number of eligible entities to ensure vigorous competition for contracts.

Contracts would be awarded for 3 to 5 years. The Director may waive conflict of interest rules applicable to federal acquisitions.

Conditions of participation for contracting entities

Plan sponsors must comply with rules regarding enrollment; information disclosure; pharmacy access; access to negotiated drug prices; formularies; and secondary payer. Sponsors must have in place a drug utilization management program; quality assurance systems and systems to reduce medical errors; a program to control fraud, abuse, and waste; and a medication therapy management program(developed in cooperation with licensed pharmacists and physicians).

Benefit managers would have to perform some or all of the following: establish a schedule of drug prices through negotiations; enter into participation agreements with pharmacies; maintain updated records of all their enrollees; administer claims; coordinate benefits with other benefit managers; furnish enrollees an explanation of benefits whenever drugs are provided; have in place systems for cost and drug management, quality assurance, and systems to reduce medical errors as well as to control fraud, waste, and abuse; disseminate informational materials; safeguard confidentiality; maintain grievance and appeals procedures; maintain adequate records and submit necessary reports and data. The benefit manager may submit a proposal for increased government cost-sharing for certain drugs if there is evidence that such increased cost-sharing would not increase federal spending.

Private entities would have to perform the following: establish a schedule of drug prices through negotiations; enter into participation agreements with pharmacies; administer claims; coordinate benefits with other benefit mangers; furnish enrolled individuals an explanation of benefits whenever drugs are provided; have in place systems for cost and drug management, quality assurance, and systems to reduce medical errors as well as to control fraud, waste, and abuse; disseminate educational and informational materials; have systems to safeguard confidentiality; maintain grievance and appeals procedures; maintain adequate records and submit necessary reports and data. The private entity may submit a proposal for increased government cost-sharing for certain drugs if there is evidence that such increased cost-sharing would not increase federal spending.

Benefit managers would have to perform some or all of the following: establish a schedule of drug prices; enter into participation agreements with pharmacies; maintain updated records of all their Part D enrollees; administer claims; coordinate benefits with other benefit managers; furnish enrollees an explanation of benefits whenever drugs are provided; have in place systems for cost and drug management, quality assurance, and systems to reduce medical errors as well as systems to control fraud and abuse; disseminate informational materials; safeguard confidentiality; maintain grievance and appeals procedures; maintain adequate records and submit necessary reports and data. The benefit manager may submit a proposal for increased government cost-sharing for certain drugs if there is evidence that such increased cost-sharing would not increase federal spending.

Drug Utilization Review (DUR) requirements

Drug plan sponsors must have a medication therapy management program to ensure prescribed drugs are used appropriately and to avoid errors in the prescribing and utilization of drugs.

Benefit managers must have in place a drug utilization review program which conforms to Medicaid (section 1927(g)(2)) standards, modified as appropriate by the Secretary.

Benefit managers must have in place a drug utilization review program which conforms to Medicaid (section 1927(g)(2)) standards, modified as appropriate by the Secretary..

Benefit managers must have in place a drug utilization review program which conforms to Medicaid (section 1927(g)(2)) standards, modified as appropriate by the Director.

Confidentiality

Plan sponsors must have procedures to safeguard privacy, maintain accurate records, and allow enrollees timely access to their records in the same manner as for M+C plans.

Benefit managers must have in effect systems to safeguard confidentiality of information on enrolled individuals. Pharmacies must have in effect systems to ensure compliance with confidentiality standards.

Benefit managers must have in effect systems to safeguard confidentiality of information on enrolled individuals. Pharmacies must have in effect systems to ensure compliance with confidentiality standards.

Benefit managers must have in effect systems to safeguard confidentiality of information on enrolled individuals. Pharmacies must have in effect systems to ensure compliance with confidentiality standards.

PHARMACY/PHARMACIST PROVISIONS

Pharmacy access rules

Plan sponsors must secure access to a sufficient number of pharmacies (which may include mail order) to ensure convenient access (including emergency access)..

Benefit managers would be required to negotiate and contract with all pharmacies meeting minimum standards on terms that would secure sufficient participation to ensure access. Pharmacies must be state licensed; comply with quality and access requirements; adhere to established prices (including charging the negotiated price for drugs excluded from coverage (e.g., weight loss, cosmetic, etc.)that are available to beneficiaries); have electronic and management systems in place; maintain adequate records and make reports to the benefit manager as required; implement systems for quality assurance, cost management and reduction of medical errors; comply with confidentiality standards; and comply with any other requirements of the Secretary.

Contracting entities would be required to negotiate and contract with all pharmacies meeting minimum standards on terms that would secure sufficient participation to ensure access. Pharmacies and pharmacists must be state licensed and adhere to established prices (including charging the negotiated price for excluded drugs that are available to beneficiaries). They must also comply with performance standards related to: quality assurance, reduction of medical errors, and participation in DUR; systems to ensure confidentiality; and other requirements to ensure the quality of the program. The Secretary shall give special attention to access, pharmacist counseling, and delivery in rural and hard-to-serve areas by providing such things as bonus payments to retail pharmacists in rural areas, extra payments to the private contracting entities for rapid delivery of drugs, etc.

Benefit managers would be required to negotiate and contract with all pharmacies meeting minimum standards on terms that would secure sufficient participation to ensure access. Pharmacies must be state licensed; comply with quality and access requirements; adhere to established prices (including charging the negotiated price for drugs excluded from coverage (e.g., weight loss, cosmetic, etc.)that are available to beneficiaries); have electronic and management systems in place; maintain adequate records and make reports to the benefit manager as required; implement systems for quality assurance, cost management and reduction of medical errors; comply with confidentiality standards; and comply with any other requirements of the Director.

Pharmacy reimbursement

In establishing fees, a plan sponsor must take into account the time and resources required to implement the required medication therapy management program.

Contracting terms must be such to secure participation by a sufficient number of pharmacies to ensure convenient access (including emergency access).

Contracting terms must be such to secure participation by a sufficient number of pharmacies to ensure convenient access (including emergency access).

Contracting terms must be such to secure participation by a sufficient number of pharmacies to ensure convenient access (including emergency access).

Pharmacist counseling reimbursement

No provision.

No provision.

Pharmacies that meet the standards are eligible to enter into agreements with the private contracting entities to furnish covered drugs and pharmacistsí services.

No provision.

FEDERAL GOVERNMENT AND FINANCING

Federal Trust funds

A "Medicare Prescription Drug Account" would be established as a separate account in the SMI (Part B) Trust Fund. The Administrator of the MBA would be a member of the Board of Trustees for the HI (Part A) and SMI Trust Funds. The Board of Trustees would be required to submit an additional annual report to Congress which would include a statement of the total general funds expended by Medicare since its inception as well as projections of general fund expenditures required for each of 10 subsequent years, and the subsequent 50 year period. The report would be published by the Committee on Ways and Means.

A "Prescription Drug Insurance Account" would be established as a separate account in the SMI (Part B) Trust Fund. Premiums for Part B and Part D would be calculated separately.

A "Prescription Drug Insurance Account" would be established as a separate account in the SMI (Part B) Trust Fund. Premiums for Part B and Part D would be calculated separately.

A "Prescription Drug Insurance Account" would be established as a separate account in the SMI (Part B) Trust Fund. Premiums for Part B and Part D would be calculated separately. No funds from the account could be used for other OPM activities.

Federal financing

Financing for the Part D coverage subsidies would come from general federal revenues.

The new Part D benefit would be financed through Part D beneficiary premiums and general federal revenues. A March 2000 CBO estimate said the drug benefit would cost $149.3 billion over 2003-2010 ($130.6 billion for Medicare and $18.7 billion for Medicaid).

The new Part D benefit would be financed through Part D beneficiary premiums and general federal revenues.

The new Part D benefit would be financed through Part D beneficiary premiums and general federal revenues.

Administration

A new HHS agency, the Medicare Benefits Admini-stration (MBA), would administer the M+C and Part D programs. The Administrator and Deputy Administrator of MBA would be appointed by the President for 5 year terms, subject to Senate approval. Personnel would be exempt from civil service hiring and pay rules, up to certain limits. The MBA would be responsible for handling plan negotiation and contract enforcement, information dissemination, and low-income subsidies. A Medicare Policy Advisory Board (MPAB) would be established within MBA to make recommendations on topics such as fostering competition, education and enrollment, risk-adjustment and use of disease management programs. The MPAB would have 7 private sector members, appointed by the President, the House and the Senate. An Office of Beneficiary Assistance and a Medicare Ombudsman would also be established within the MBA.

HCFA would administer a bidding process and selectively contract with one benefit manager in each area to administer the drug benefit for Medicare FFS enrollees. The Part D benefit for enrollees in M+C plans would be administered by the M+C organizations under contract with HCFA.

HCFA would administer a bidding process and selectively contract with one private entity in each area to administer the drug benefit for Medicare FFS enrollees. The Part D benefit for enrollees in M+C plans would be administered by the M+C organizations under contract with HCFA.

The Director of the Office of Personnel Management (OPM) would be responsible for administering Part D through contracts with benefit managers. There could be numerous benefit managers serving the same areas. The Director shall design provisions to exclude bids designed to exploit adverse selection, including the definition of a minimum geographical service area. Functions related to eligibility, enrollment, and collection of premiums would be administered by the Secretary of HHS in coordination with the Director.

Who bears risk for utilization/cost?

In general, prescription drug plan sponsors would bear the risk for Medicare enrollees. The federal government would bear some of the risk for high cost enrollees through federal reinsurance payments. The proportion of risk borne by the federal government would increase as a patientís drug costs rise. Plans would always be responsible for at least 10% of benefit costs.

In general, the federal government would bear most of the risk for cost and utilization. The Secretary is authorized to include in contracts with benefit managers appropriate incentives to control cost and utilization such as bonus and penalty incentives for administrative efficiency; allowing benefit mangers to share benefit savings; and risk sharing arrangements related to benefit payments.

In general, the federal government would bear most of the risk for cost and utilization. The Secretary is authorized to include in contracts with benefit managers appropriate incentives to control cost and utilization such as bonus and penalty incentives for administrative efficiency; allowing benefit mangers to share benefit savings; and risk sharing arrangements related to benefit payments.

In general, the federal government would bear most of the risk for cost and utilization. The Director is authorized to include in contracts with benefit managers appropriate incentives to control cost and utilization such as bonus and penalty incentives for administrative efficiency; allowing benefit mangers to share benefit savings; and risk sharing arrangements related to benefit payments. Insofar and the Director provides for risk-sharing arrangements, the Director shall enter into or promote arrangements such as the establishment of a secondary insurance market or pooling mechanism for distributing excess risk.

RELATIONSHIP TO CURRENT COVERAGE

Traditional FFS Medicare

Beneficiaries enrolled in Medicare FFS would have the choice of at least 1 PDP (as well as at least 1 M+C plan). The Administrator would be responsible to ensure choice. If no private sector plans served an area, the Administrator could provide financial incentives, including partial underwriting of risk, to plans to encourage participation, cut only for so long as necessary to assure access to coverage. The Administrator could not provide for the government to fully underwrite risk, or underwrite any risk for a public PDP sponsor offering a nationwide plan, and shall seek to maximize the assumption of risk by M+C and PDP sponsors. The FFS program would continue to be administered by HCFA and the HCFA Administrator would be increased in rank to equal that of the MBA Administrator.

Beneficiaries enrolled in FFS Medicare could elect to enroll in Part D, pay the Part D premium, and obtain the standard Medicare Part D drug benefits.

Beneficiaries enrolled in FFS Medicare could elect to enroll in Part D, pay the Part D premium, and obtain the standard Medicare Part D drug benefits.

Beneficiaries enrolled in FFS Medicare and Medicare Part D would have an annual option to select a benefit manager through which to obtain Medicare Part D drug benefits.

Medicare+Choice (M+C)

M+C plans may not offer drug coverage unless it meets, as a minimum, standard coverage requirements. The premium for drug coverage must be computed and displayed separately from any premium for Part A and B coverage. Drug premiums may be reduced by such amounts a necessary to comply with requirements to offer extra benefits. In addition, the proposal includes policy changes that would increase payments to M+C plans for Part A and B benefits.

M+C plans would have to offer the Part D drug benefits (or equivalent benefits as allowed under M+C rules) to Part D enrollees. The plan could not impose a deductible, or coinsurance of greater than 50%; would have to cover specific drugs for an enrollee if prescribed as medically necessary; and would have to allow enrollee access to the planís discounted prices once their benefit maximum is exhausted. M+C plans would submit a bid for Part D benefits as part of their bids under the new "competitive defined benefit" system. The same payment rules would apply as apply to Part A and Part B (i.e., full payment up to the lesser of their bid or 96% of the cost of the government drug benefit in the service area). Risk adjustment is not required prior to 2005. If the planís Part D premium is more than the government payment amount, beneficiaries must pay the difference; if it is less, the beneficiary would receive 75% of the difference as a reduction in their Part D premium.

M+C plans would have to offer the actuarial equivalent of the Part D benefit. The plan could not impose a deductible or coinsurance of greater than 50%; would have to cover specific drugs for an enrollee if prescribed as medically necessary; and would have to allow enrollee access to the planís discounted prices once their benefit maximum is exhausted. Plan payments would be similar to current law. The Secretary would establish a capitation rate based on projected national per capita costs for Part D drug benefits and associated claims processing costs. The rate would be updated annually by the per capita growth rate in Part D expenditures. Risk adjustment would be as determined appropriate by the Secretary until 2006, when the same factors as applied to Part A and B payments would apply. The ACR and requirements for additional benefits would be determined separately for benefits under Parts A and B and for drugs under Part D.

M+C plans would have to offer the Part D drug benefits (or equivalent benefits as authorized by the Director) to Part D enrollees. The plan could not impose a deductible or coinsurance of greater than 50%; would have to cover specific drugs for an enrollee if prescribed as medically necessary; and would have to allow enrollee access to the planís discounted prices once their benefit maximum is exhausted. M+C plans would receive payments per Part D enrollee for providing Part D benefits equal to the uniform national monthly Part D premium rate. The Director could establish a budget-neutral risk adjustment methodology to apply to the Part D payment. ACR provisions would be applied separately to the Part D benefit.

Employer-sponsored retiree health coverage

Employer-sponsored plans providing qualified drug coverage would be eligible for the same reinsurance subsidies as M+C plans and PDPs.

Under the Employer Incentive Program, a subsidy would be paid to employers offering drug benefits equal to or better than the standard Part D benefit to all retirees without discrimination based on age or health status. The subsidy would be equal to 2/3 of the Part D premium per eligible retiree. Unsubsidized employer costs would be tax deductible as a business expense on the same basis as current law. Standards would be equivalent to those for M+C plans. Beneficiaries with employer-sponsored drug coverage would not pay the Part D premium. Retirees in a plan that is terminated or fails to meet standards, would have an opportunity to enroll in Part D during a one-time six-month special enrollment period.

Under the Employer Incentive Program, a subsidy would be paid to employers offering drug benefits equal to or better than the standard Part D benefit to all retirees without discrimination based on age or health status. The subsidy would be equal to 2/3 of the Part D premium per eligible retiree. Unsubsidized employer costs would be tax deductible as a business expense on the same basis as current law. Standards would be equivalent to those for M+C plans. Retirees with employer-sponsored drug coverage would not pay the Part D premium. Retirees in a plan that is terminated or fails to meet standards, would have an opportunity to enroll in Part D during a one-time six-month special enrollment period.

Under the Employer Incentive Program, a subsidy would be paid to employers offering drug benefits equal to or better than the standard Part D benefit to all retirees without discrimination based on age or health status. The subsidy would be equal to 2/3 of the Part D premium per eligible retiree. Unsubsidized employer costs would be tax deductible as a business expense on the same basis as current law. Standards would be equivalent to those for M+C plans. Beneficiaries with employer-sponsored drug coverage would not pay the Part D premium. Retirees in a plan that is terminated or fails to meet standards, would have an opportunity to enroll in Part D during a one-time six-month special enrollment period.

Medicare supplemental coverage (Medigap)

No new Medigap policies providing drug coverage could be issued after January 1, 2003, except to replace a policy with drug coverage for an individual. Medigap policies A through G must be guaranteed issued to beneficiaries terminating enrollment in Medigap plans with drug coverage and enrolling in Part D plans.

A new Medigap plan "K" is established that would require nominal beneficiary copayments. Medigap open enrollment rules are extended to the disabled and ESRD populations. Other extensions of open enrollment rules are made for special circumstances, including allowing certain beneficiaries to have access to all Medigap plan types (including drug plans) after losing other coverage. The Secretary is report to Congress by January 1, 2002, recommendations for improving Medicare supplemental coverage.

No provis

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